Bloomberg News

Australia’s Swan Says G-20 Views Global Recovery as ‘Fragile’

Australian Treasurer Wayne Swan said
most of his Group of 20 counterparts see the global recovery as
“fragile” and called on Europe to press ahead with closer
financial integration and the U.S. to cut its budget deficit.

“From my initial meetings, it’s clear most of my G-20
colleagues view the global recovery as fragile,” Swan said in
his weekly economic note released yesterday. “It’s critical
that leaders of many major economies now get on with the
necessary structural reforms needed to underpin growth.”

The world economy will grow 3.3 percent this year, the
slowest since the 2009 recession, and 3.6 percent next year, the
International Monetary Fund said Oct. 9. That compares with July
predictions of 3.5 percent in 2012 and 3.9 percent in 2013.

Even as the U.S. has recorded more positive data in recent
weeks, that nation’s recovery remains “shaky,” Swan said.
“The most pressing issue for whoever wins this week’s
presidential election will be working with Congress to avert the
fiscal cliff,” he said, referring to $607 billion in federal
spending cuts and tax increases scheduled to take effect in
January unless the U.S. Congress acts.

President Barack Obama and Mitt Romney crisscrossed the U.S.
on the final weekend of the campaign before tomorrow’s election
as a closely watched poll in the swing state of Iowa showed the
incumbent ahead there. Obama is leading the Republican
challenger 47 percent to 42 percent among likely Iowa voters,
the Des Moines Register’s Iowa Poll shows.

‘Sustainable Footing’

“While avoiding the fiscal cliff is critical to supporting
activity in the months ahead, the U.S. will also need to outline
a strategy to get its budget back on a sustainable footing to
support economic growth over the longer term,” Swan said.

Swan said he will travel to Washington from the G-20 summit
in Mexico for meetings with U.S. Treasury Secretary Timothy F. Geithner, Federal Reserve Chairman Ben S. Bernanke, U.S.
Congressional Budget Office Director Douglas Elmendorf and
International Monetary Managing Director Christine Lagarde.

In Europe, Greek Prime Minister Antonis Samaras’s bid to
please lenders from the European Union and IMF with a 13.5
billion-euro austerity package and unlock funds ran into renewed
obstacles last week. A law on state asset sales scraped through
parliament, raising questions whether the government will be
able to muster enough support to pass the measures.

Youth Unemployment

Swan noted that about 18.5 million people in Europe are
looking for work, more than Australia’s entire adult population.

“Perhaps most troubling is the fact that youth
unemployment is around 50 percent in countries like Greece and
Spain,” he said. Europe’s unemployment rate is 11.6 percent,
compared with 5.4 percent in Australia.

Back home, Swan is bidding for a A$44 billion ($45 billion)
swing to bring the nation’s budget back to a surplus in time for
an election due by late next year.

“We have an enviable combination of solid growth, low
unemployment, contained inflation and low debt, with the budget
returning to surplus ahead of every major advanced economy,” he
said. “The problems we see in so many parts of the developed
world only highlight the need for Australia to continue our
nation’s long record of reform.”

To contact the reporter on this story:
Michael Heath in Sydney at
mheath1@bloomberg.net

To contact the editor responsible for this story:
Paul Tighe at
ptighe@bloomberg.net